Microsoft On New RTB-Enabled Mobile Ad Exchange

Microsoft Advertising's Raj Kapoor announced the launch of "the Mobile Advertising SDK for Windows Phone 7 and Microsoft Advertising Exchange for Mobile, the industry’s first real-time, bidded ad exchange in mobile." Read the announcement.

JAMIE WELLS: I've been here at Microsoft a little over a year. I came out of OMD where I ran the OMD national US practice for mobile across search and display. I moved out to Redmond last July to be a part of their newly forming mobile business group and to lead trade marketing.

Tell us about the news regarding Microsoft’s mobile ad exchange. What does it mean?

JAMIE WELLS: [Last Thursday]'s news was around two areas: launching the Microsoft Advertising SDK for Windows Phone 7, as well as the Microsoft Advertising Exchange for mobile – both of which are designed to work together. The SDK is obviously crucial in that developers developing for Windows Phone need an ad‑supported monetization option at launch, and our solution really delivers for developers on so many fronts, as it is brought to them by the folks that are also bringing them the OS… they’re tightly integrated.

Also, one of the key ways in which this monetization is enabled is through Microsoft Advertising Exchange for Mobile - the industry's first real‑time bidded mobile ad exchange.

Why is this an important announcement?

JAMIE WELLS: For me, the real headline is that these solutions solve so many pain points for mobile developers – as they are challenged as in creating applications for different mobile platforms. They obviously have to make money at the end of the day, and it's not enough to provide them with just another ad solution. Superior monetization is one of the things we're hanging our hat on as a company for mobile application developers, and with this announcement we’re really making good on that promise.

A big part of the announcement is around our initial demand partners in the Exchange: Millennial Media , one of the largest independent mobile ad networks; WHERE, which is the leading hyperlocal mobile ad network in the US; InMobi, which is a global leader.. the exchange and in-app SDK are launching in the US right now – but we obviously have our eyes on the world, as we're a global company ‑ and then there’s Mobclix, which will also be with us at launch as a source of demand for the Exchange. We also have our own sales force. And finally, we have adCenter advertiser demand as well.

How easy is all this for developers to take advantage of?

JAMIE WELLS: We focus on providing truly complete solutions and understanding what developers want, what they need. To implement the SDK into their application there's a plugin already created for Visual Studio. It's very easy with zero lines of code and extremely well-documented. We really try to take care of all the pain points and make this a very seamless launch.

What’s the value proposition for advertisers?

JAMIE WELLS: There are the benefits behind the exchange itself ‑ the real‑time bidding. With this solution specifically, we're hitting areas that are going to bring additional value of advertisers and make it easier for them to buy mobile. For example, we’re making sure that at launch, all these systems and all of our reserve inventory will be compatible with DoubleClick and Atlas, for third‑party verification and ad delivery, and click performance.

This really helps buyers scale their buys, by using the same systems their already using online to manage, traffic, and pull reporting. By being compatible with Third Party Ad Serving systems advertisers can optimizes creative efficiently and in a matter of minutes. They don't even have to pick up the phone. They can just do it on their own system and point the ad tag to the creative on their servers. It's a very different type of solution, designed to scale with advertiser need. It's about control.

So visibility, transparency, control ‑ these are all things that are important to advertisers and important to us in this launch. A big part of control is making sure that your ad is reaching the right person. In addition to the standard targeting parameters - unit specs, demographics, location, carrier, etc. - the big one will be behavioral. If you're familiar with our behavioral targeting product, it's driven by PC content consumption, Bing search queries and Xbox Live data. It's cut for recency to inform those segments.

Do you have a sense that there is real demand out there from advertisers for access to mobile inventory in a real‑time bidded environment?

JED NAHUM:What I have experienced from the agencies and a lot of other buyers is that the love affair with RTB is still going on and they are pushing us to expand beyond just straight PC display inventory. The demand is there.

Given the bandwidth constraints and potential latency issues of mobile, how can a real-time bidded (RTB) environment work in mobile?

JAMIE WELLS: Most of the heavy lifting is done on the server side. Certainly the carrier network has the narrowest pipe in that whole chain, but we are already dealing with those pipe constraints every day when we do third‑party ad serving in mobile.

You’ve said advertisers will be able to buy mobile exchange inventory through adCenter. For the bigger buyers, will there be an adCenter API that they can to and access for this real‑time bidded inventory?

JAMIE WELLS: Nothing on that to announce today.

What are you thinking about pricing?

JAMIE WELLS: Pricing in the Exchange will be on a CPI (cost per impression) basis. AdCenter demand will be purchased as CPC (cost per click), which is then converted to CPI in order to flow thru the system. Obviously, however you tabulate it, buying on a CPC basis is more difficult in the exchange where someone's taking a risk somewhere. But, the buyer isn't typically exposed to that risk.

Can you provide an estimate in terms of expected impression levels for the mobile ad exchange?

JAMIE WELLS: The short answer is the device hasn't launched yet. So, it's far too early to give an estimate publicly. The device launches in the holiday season.

What are the main inventory pools for the mobile ad exchange?

JAMIE WELLS: There are several main pools of supply.

The first are the traditional publishers, the big powerhouses that are developing, extending their brands across through mobile into the application space.

Then you have the non‑traditional web publishers that are also pushing through in mobile publishers into the mobile application space. An example of this type of publisher would be Pandora.

And then the third big bucket is the mobile-only guys that you may never have heard of. Think of PopCap gaming and these types of companies, for example.

And then there is the long tail of developers. That's the beautiful thing about mobile now. You have this sort of garage developer mentality whereas if you were to have the barriers too high, you couldn't do it. We have a long body and tail of developers creating Windows Phone 7 applications, and now they’ll have a very quick and easy way to monetize with the launch of our Advertising SDK for Windows Phone 7 and the Microsoft Advertising Exchange for Mobile.